Lords Trustees Podcast: 7
Lords Trustees Podcast: 7
Living Trust Lesson 4: Specifics For Creating Your Living Trust
Living Trust Lesson 4: Let's Get Specific: Creating Your Living Trust
Lords Trustees Podcasts are segmented into 2 portions. A presentation on metaphysical studies, followed by a presentation in applying the metaphysical precepts to private living. For those that prefer to listen, there is a video podcast at the beginning of each Substack Lesson. For those that prefer to read, posted below the video, readers may scroll down to find the written notes associated with this podcast. Enjoy!
Lesson 4, Video Portion
Objective:
By the end of this lesson, students will have a thorough understanding of the practical steps involved in creating a living trust, including drafting the trust document, selecting appropriate trustees, and funding the trust. This lesson provides actionable guidance on each aspect, ensuring that students are prepared to create a living trust tailored to their specific needs.
1. Introduction: The Building Blocks of a Living Trust
Overview:
Creating a living trust involves several key steps, from drafting the trust document to transferring assets into the trust. This lesson will guide you through each step, ensuring that your living trust is set up correctly and efficiently.
The Importance of Precision:
Attention to detail is critical when creating a living trust. Any errors or omissions could lead to complications, delays, or unintended consequences for your estate.
2. Drafting the Living Trust Document
Choosing the Type of Trust:
Revocable vs. Irrevocable:
Revocable Living Trust: Allows you to retain control and make changes during your lifetime.
Irrevocable Living Trust: Cannot be modified after its creation but offers stronger asset protection.
Single vs. Joint Trust:
Single Trust: Created by one individual.
Joint Trust: Typically created by married couples, covering joint and individual assets.
Essential Components of the Trust Document:
Declaration of Trust:
States the creation of the trust, the trustor’s intent, and identifies the trustor, trustee, and beneficiaries.
Trust Property:
A description of the assets being transferred into the trust.
Trustee Provisions:
Outlines the trustee’s powers, duties, and compensation.
Specifies how and when a successor trustee will step in.
Distribution Provisions:
Specifies how assets will be distributed to beneficiaries.
May include conditions for distribution, such as reaching a certain age or achieving specific milestones.
Sample Language for Key Provisions:
Provide examples of typical clauses used in living trust documents, such as those detailing trustee powers, successor trustee appointment, and asset distribution.
Legal Formalities:
The trust document must be signed and notarized to be legally binding.
Consider having an attorney review the document to ensure compliance with state laws.
3. Selecting the Right Trustee and Successor Trustee
Role of the Trustee:
The trustee is responsible for managing the trust’s assets, making distributions to beneficiaries, and ensuring that the trust is administered according to the trustor’s wishes.
Qualities of an Ideal Trustee:
Trustworthiness: The trustee should be someone you trust implicitly to act in the best interests of your beneficiaries.
Financial Acumen: They should have a good understanding of financial matters or be willing to seek professional advice.
Impartiality: The trustee should be able to act impartially, especially if there are multiple beneficiaries.
Successor Trustees:
It’s important to name a successor trustee who can take over if the original trustee is unable or unwilling to continue.
Consider naming multiple successors in case the first choice is unavailable.
Professional Trustees:
You may choose a professional trustee, such as a bank or trust company, for impartiality and expertise, though this typically involves higher fees.
Common Mistakes to Avoid:
Choosing an Unqualified Trustee: Selecting someone based on relationship rather than capability.
Failing to Name a Successor Trustee: This can lead to court intervention if the original trustee can no longer serve.
Case Study:
A scenario where the original trustee passed away unexpectedly, and the importance of having a qualified successor trustee became evident.
4. Funding Your Living Trust
What Does It Mean to Fund a Trust?
Funding a trust involves transferring ownership of assets from your name into the name of the trust. This step is crucial because if the trust is not funded, it cannot function as intended.
Types of Assets to Transfer:
Real Estate:
Deeds must be re-titled in the name of the trust.
Check state laws regarding property taxes and transfer fees.
Bank Accounts and Investments:
Bank and brokerage accounts should be re-titled in the trust’s name.
Consider whether retirement accounts should be transferred or remain in your name, with the trust as the beneficiary.
Personal Property:
Valuable items such as jewelry, art, and vehicles can be transferred to the trust using a Bill of Sale.
Business Interests:
Ownership interests in a business can be transferred to the trust, but it may require approval from other business partners or shareholders.
Digital Assets:
Consider how digital assets, such as online accounts and cryptocurrencies, will be managed within the trust.
Funding Challenges and Solutions:
Overlooking Assets: Make sure to include all significant assets in the trust. A “pour-over” will can be used to transfer any overlooked assets into the trust after death.
Retirement Accounts: While most retirement accounts are not transferred into the trust, you can name the trust as the beneficiary to ensure these assets are distributed according to your wishes.
Sample Process for Funding a Trust:
Provide a step-by-step guide for transferring different types of assets into the trust, including necessary forms and procedures.
Review and Update Regularly:
As you acquire new assets or your financial situation changes, it’s essential to continue funding the trust to keep it effective.
5. Finalizing and Maintaining Your Living Trust
Reviewing the Trust Document:
Before finalizing your living trust, review all provisions to ensure they accurately reflect your wishes and are legally sound.
Executing the Trust:
Sign the trust document in the presence of a notary. Some states may require witnesses as well.
Storing the Trust Document:
Store the original trust document in a safe, accessible place, such as a safe deposit box or with your attorney. Provide copies to your trustee and successor trustee.
Ongoing Trust Maintenance:
Regularly review and update your trust, especially after significant life events such as marriage, divorce, birth of a child, or acquisition of new assets.
Communicating with Beneficiaries:
While not legally required, it may be helpful to inform your beneficiaries of the trust’s existence and the general nature of its provisions.
Professional Assistance:
Consider hiring an attorney or estate planner to assist with drafting and funding your trust, especially if your estate is complex.
Activities:
Trust Document Drafting Exercise:
Draft a basic living trust document using a template, including provisions for trustees, asset distribution, and successor trustees. Discuss the process in small groups.
Role-Playing Trustee Selection:
Role-play scenarios to explore different considerations when selecting a trustee and successor trustee. Discuss the pros and cons of each choice.
Asset Transfer Worksheet:
Create a worksheet listing all assets to be transferred into the trust. Include details on how to transfer each type of asset and any potential challenges.
Assessment:
Essay: Funding a Living Trust
Write an essay explaining the importance of funding a living trust and the potential consequences of failing to do so. Discuss different asset types and the steps required to transfer them into a trust.
Sample Essay Prompt:
“Explain why funding a living trust is a crucial step in the estate planning process. Discuss the different types of assets that should be transferred into the trust and how to manage any challenges that may arise.”
Sample Quiz Questions:
True or False: A living trust must be funded to be effective.
Multiple Choice: Which of the following assets is typically NOT transferred into a living trust?
A) Real estate
B) Bank accounts
C) Retirement accounts
D) Personal property
Short Answer: Why is it important to select a qualified successor trustee when creating a living trust?
Multiple Choice: What is the primary purpose of a “pour-over” will in the context of a living trust?
A) To transfer any overlooked assets into the trust after death
B) To designate a new trustee
C) To create a new trust
D) To manage digital assets
True or False: Once a living trust is established, there is no need to update it.
Conclusion:
This lesson has provided a comprehensive guide to creating your living trust, from drafting the document to selecting trustees and funding the trust. By understanding and following these steps, you are well on your way to establishing a secure and effective living trust that reflects your wishes and protects your estate.
If you have Trust or Estate planning needs or are looking to set up Communities, Churches, Fellowships, Unincorporated Membership Association aka: “Private Membership Association”, Unincorporated Business Organizations to operate your Business in the private or you may have had your spiritual awakening and are ready to start your Private Ministry and structure that Ministry properly by operating out of a Private Ministry Management Trust we have the information you all need. If you are a Member of the Lords Trustees Fellowship, feel free to reach out to Joseph Anthony, Minister at josephanthonyminister@gmail.com c/o RTC Trust Management Group and we will provide you with a free consultation. RTC Trust Management Group offers consultations and fiduciary services to all of the Lords Trustees Fellowship Members under an NDA and Private Contract.
Next Steps:
Read Lesson 5: Tax-Savvy Trusts: Amping Up Your Financial Legacy, where we will explore strategies to mitigate estate and income taxes through the use of living trusts.